Trellidor Holdings Limited (TRL) Earnings Call Transcript & Summary

Good morning, everyone. Thank you, very much for joining us this morning for the Trellidor Holdings Limited Interim Results Presentation. My name is Vera Kleynhans and I'm speaking to you from a gloomy and dark PSG Capital Board Room here in Stellenbosch since I'm currently experiencing load shedding, as I'm sure some of you are also. We -- the presentation will be given today by Damian and Terry. Terry Dennison, being CEO of the Trellidor Holdings Group. Damian Judge, the Financial Director, CFO of the Trellidor Group and they're sitting in Durban. I hope they have power. I'll be handing over to them shortly. Terry will give us an overview of the year and the results, and then Damian will run us through the financials, which were also released on SENS this morning. And at the end, as per usual, we will have a Q&A session. [Operator Instructions]. Damian and Terry, over to you.

Thanks, Vera. And yes, luckily, we are sitting in Durban, and we're not suffering load shedding at the factory complex. In fact, we are blessed in our location in Phoenix Industrial Park, where we suffer very little load shedding at the factory, which is always a blessing. Good morning, all. Thank you for joining us today for the Trellidor Holdings Limited Interim Results presentation, the period ended 31 December 2022. Thanks to you, Vera, Kelvin and team at the PSG Capital for setting up this webinar again for us. I think it's common knowledge that the operating environment in South Africa remains tough, probably exacerbated this year with rising interest rates and inflation adding to the economic pressure. Europe and particularly the U.K., for us, have also suffered weak economies and are tackling inflation and interest rates not seen in many years. Thankfully, we have seen a marked improvement in our African markets, which is very welcome. Input prices have also stabilized and interest rates are close to a peak. So hopefully, the operating environment will start to improve in the foreseeable future. Our salient points. Revenue for the 6 months is down slightly, just under 4% down for the 6 months. Pleasingly, our gross profit margins have recovered and improved by over 4% through the comparable period. Our headline earnings per share show a very small improvement for the half year, and that's thanks to some tax relief, which Damian will talk to you a bit later. And our cash from operations at ZAR 7 million compares to ZAR 18 million in 2022, and we'll be talking to working capital investment a bit later in the presentation. I think just to deal with the issues that have been well publicized in SENS over the last 12-month period. And this has to do with the Labour Court and the Labour Appeal Court ruling for a partial reinstatement of certain of the employees that were dismissed in 2013. And the subsequent refusal of the Constitutional Court to rule down the matter. The group was required to pay limited backpay and reinstate according to the order 42 employees. To this extent, the group had provided an amount of ZAR 32.1 million in the previous financial year. So to enact the order, consultation and an onboarding process was conducted through the process of -- through the course of November, during which 41 employees presented themselves for work. Following this process, 30 employees have returned to work and 11 have opted to take a package in full and final settlement of the judgment. Returning employees have been integrated into the workforce, thankfully, without any notable disruption to production. And this was during the peak production period of the back end of November and December before the annual shutdown on the 16th of December. In total, ZAR 31.8 million of the ZAR 32.1 million was utilized during the reinstatement process. And the small balance has been reversed during the current reporting period. Importantly, no further significant costs are anticipated in this matter. Looking at our strategic objectives for 2023 and the group's prioritized as follows: the focus on rebuilding franchise and branch selling capacity, which has been negatively impacted through the COVID period in particular, where we have lost a fair amount of our selling capacity sales consultants in the field. Drive Trellidor's recovery in the African market sector following the COVID and hopefully, the recovery of those economies. Recruitment of additional selling resources into Trellidor U.K.. Rebuilding the base fundamentals of the Taylor business, which has been hit hard over the last few years. And introducing new products focused on expanding our product offering into the commercial property space in South Africa, in particular. With regard to rebuilding the franchise selling capacity, sales consultants are currently being actively recruited in the main centers, in particular, with additional heads being added in Cape Town and Johannesburg in Half 1. Further heads will be added in Johannesburg through Half 2. At the beginning of Half 2, Trellidor launched its Sales Internship program with 6 graduates being recruited, who will be trained over a 6-month period. And hopefully, the successful interns will then be absorbed into the franchise and branch network from July onwards. Following that onboarding exercise, we will then look to a second and then a third and a fourth and a fifth internship program as we go forward. Trellidor's recovery in the African market sector has been extremely pleasing. There's been a nice bounce back. Sales into the Rest of Africa have increased 64% from the comparable period. The Trellidor International team has now been fully remanned and has been led by an experienced sales and marketing executive with clear focus on the African market. Recruitment of additional selling resources into the U.K. is important to support any growth in that market. But the U.K. operation just, in summary, has been focused on expanding its customer base, both commercially and in the residential sector. We've been listed as a preferred supplier with 2 new retail chains with the first orders arriving early in H2, which is very pleasing. It takes a fair amount of time to get into these retail chains. But so to be listed as a preferred supplier in 2 new chains this year is pleasing. We've conducted a successful pilot digital advertising campaign with Google Ads and has yielded encouraging results with sales to the small business and residential markets being achieved. More resources will be applied to this market sector going forward. To ensure we maintain our service levels, additional selling resources and also additional installation resources have been hired. As far as the 6 months ago, sales to existing customers was slow in the period, with project-type work, in particular, being delayed due to the weak economy and also alternate priorities. Project work orders have been received through January and February, which will support Half 2 revenue. Interestingly, the reactive work (response to crime) has been robust in the first 6 months and have shown quite strong growth over reactive work in the comparative period. The Taylor business has seen a total rebuild of the management team with a clear intention of stabilizing the ship and getting the basic fundamentals of the business back into the foundations. So the new management structure is now complete and was fully populated through Half 1, and we're very, very happy with the results so far. Despite the softer top line, gross profit margins have improved to 32.1%, and overheads have been very well managed and decreased 16.6% year-on-year. And with regard to the softer top line, there are some sacrifices that have been made on some low-margin sales channels where we've rationalized product ranges and walked away from some of the lower-margin business. As a result of the gross profit improvements and overhead management, EBITDA has increased by 41.4% to ZAR 11.9 million over the comparative period. Introducing new products in the Trellidor business into the commercial property space in South Africa. The first of the products, Coroview, was launched during quarter 1 of F23. And the specific product is a specialist product targeted at the automotive and emergency service industries. The second sectional door product, Corosteel, is currently in development, and once available, will be marketed primarily to warehousing and industrial applications. During F23, Q3, Trellidor will also be launching a new traditional Trellidor range as well as a new security mesh screen product. Looking forward and reflecting on January and February, sales are tracking marginally ahead of the prior year, but I think it's fair to say, demand remains subdued locally. Trellidor U.K. should start to show incremental growth from the results in Half 1 with sales to the new retail customers commencing, a recovery in the project work from existing customers and the additional selling resources targeting growth opportunities coming to bear. Investment in inventory throughout the group continued through Half 1 with a peak in December, particularly to mitigate supply disruption anticipated due to the Chinese COVID restrictions and Chinese New Year, which the COVID release of restrictions in China now seems to indicate the COVID is a thing of the past in China as well. Stock shortages experienced in F22 Half 2 is flat as a result of supply challenges are not anticipated given the inventory build through Half 1. This was particularly severe in the Taylor business during Half 2 last year. Cash generation is planned to improve with the release of certain of the inventory investment paid in Half 1, and that's targeted particularly in the Taylor and the NMC businesses. Looking further ahead, the commercial and industrial product set, which are supported by dedicated selling and installation teams in the main centers should generate a return from new markets for Trellidor in the medium term. The impact of the additional selling resources being recruited, coupled with the sales internship program is anticipated to start yielding results into F24. The new product sets launched in Q3 of F23 and aimed at the residential market will be bedded down through Q4 with benefits supporting the top line through F24. We've talked about improved cash generation through Half 2, which will support a reduction in our current gearing levels in the short term, which will also reduce the pressure on our interest bill annually. So I'd like to hand over to Damian now to take us through the numbers.

Thanks, Terry, and thanks to Vera and her team for hosting us once again, even if it is from a dark boardroom somewhere. Good morning, everyone, and again, thank you for joining us this morning. Group revenue for the 6 months to December 2022 has decreased 3.6% against the same period last year. In the Trellidor business unit, which is 2.2% up in the 6 months. There's been an exceptional recovery in sales into the Rest of Africa, which is up 64% year-on-year, but these gains have been offset by weak trading conditions in RSA. Taylor whose market is largely concentrated in the Western Cape and Gauteng has also struggled as a result of its reliance on the RSA market with turnover backwards 9.5%. For the NMC business unit, they have benefited from an increase in project type work in the Western Cape, although the lower demand in Gauteng has limited the gains to a 3.8% increase over the period. The Western Cape continues to dominate Taylor's geographical contribution of sales. Although there has been a 2.6% decline in sales against the previous period, the contribution of sales to the Trellidor channel have remained flat against F22 H1. Gauteng's contribution has reduced from 18% as at F22 H1 to 14% at the end of December 2022. Sales of the NMC product range in Cape Town have increased 59.3% during the period as a result of increased project work. Durban's contribution has remained flat with the major negative impact on top line coming from demand in the Johannesburg region, which has decreased 7.8% against F22 H1. As noted earlier, it is really pleasing to see our growth in the Rest of Africa over the 6 months as this has been a key focus area for the management team. In Trellidor, the franchises outside the major cities continue to prove to be resilient in challenging economic environment in RSA. NMC's Cornice range, Nomastyl, remains the largest contributor to sales, although this declined from 64% in the prior period, and the space has been taken up by skirting range, Floorstyl. This trend of skirting sales growing is in line with the global trends in this range of products. In terms of Taylor, the product mix contribution has remained largely consistent with the exception of the Venetian blind product range, which is up 39.7% when compared to the same period last year. Driven by the increased demand in Africa, sales of the traditional Trellidor product set have increased 11% from F22 H1. The contribution of roller shutters during the period has declined from 10% to 7% as a result of subdued demand for project work from our major retail customer in the U.K., which Terry alluded to earlier. We do, however, have line of sights of this improving through H2. As mentioned earlier, a recovery in sales into the Rest of Africa was one of the key strategies the executive and management team set for themselves at the start of this financial period, and the results have been exceptional. Another key challenge that was set was a recovery in margin following the significant increases in raw material and supply chain costs in the post COVID world. Across the business units, the results have been extremely pleasing, with all 3 improving significantly against the same period last year. Trellidor's gross profit percentage has improved from 45% to 49%. Taylor is up 3% to 32%, and NMC has improved from 43% to 47%. Raw material costs are anticipated to stabilize over the remainder of the financial period with the exception of NMC as Europe still battles inflationary increases. Given the improved material cost percentage in Taylor and Trellidor, growth in the top line -- growth in top line will increase our recoveries of fixed and semi-variable costs, which will improve our GPs further. The group is tracking below its F22 H1's EBITDA, mainly as a result of reduced top line and significant foreign exchange loss as a result of the devaluation of the Ghanian Cedis against the U.S. dollar over the period. We're reporting operating expenditure for the group to have increased 8.6% year-on-year against a backdrop of inflationary increases and adding the overheads of 2 new RSA franchises being Southern suburbs Cape Town and Hillcrest as reported previously, which weren't in the half year numbers in F22. Given the additional costs, we are pleased with the overhead control. However, if we have normalized for the foreign exchange impact, our year-on-year overhead increase reduces from 8.6% to 4.5%, which given the current environment is a very pleasing result. In particular, the new management team in Taylor have responded efficiently to reduce top line and have managed to reduce overheads by 17% over the period. In summary of the financial performance of the group for the 6 months ended 31 December 2022, top line remains under pressure, mainly as a result of consumer spending constraints in RSA and the need to divert spending towards electricity and water security in the short to medium term. Our recovery strategy into the Rest of Africa has yielded exceptional results as, as our margin strategy, which has seen gross margin percentage increasing 8% versus the same period in F22. GP percentage is our key measure of how efficient the group is performing. During the pre-COVID years, the Taylor business unit was underperforming against this measure. But as we have seen in these results, the recovery has started. More recently, post COVID, the raw material and supply chain costs have significantly impacted Trellidor and Taylor as we've had to absorb north of 50% material price increases across the key components. Our selling price increase strategy to respond to this has been measured, recognizing the pressure the consumer is facing. As these results indicated, we have weathered the storm and the rebuilding has begun. Our 5-year compounded annual growth rate for gross profit, although still negative, has improved from minus 4% as at F22 H1 to minus 3% as a result of the key strategies implemented across the group. Coupled to the operating pressure, we are about to take on additional debt in response to the Labour Court judgment at a time when we are in an interest rate hiking cycle, which is added to our interest bill. The group has managed these events well, and as a result, we are reporting an increase in basic and headline earnings per share of 0.4% to ZAR 0.255 per share. Having a look at the group's financial position as of 31st December 2022. As a result of the Labour Court judgment, ZAR 32 million in debt was added to the balance sheet during the period. The increase in debt and the increase in interest rates over the last 12 months has resulted in our interest cover reducing from 8.5x as of December 2021 to 6.7x at the end of this period. In spite of the flat profit levels, increased debt at a time when interest rates are moving up, the group remains comfortably within its covenant levels. The start of H2 last year was a challenging one for the Taylor and NMC business units as a result of stock-outs as China's Zero COVID policy and the start of the Ukraine conflict added additional pressure to the global supply chain. In response and to avoid a repeat of the costly stock-outs experienced, both businesses have increased their stockholding at the end of F23 H1 over and above the embedded increased cost in inventory post COVID when compared to prior periods. The investments in inventory through [ F23 ] H2 will be limited as we utilize what is available. And given that our payable levels have not increased in line with the inventory, a healthy release of cash is anticipated through the second 6 months of the financial year. As discussed, the investment in inventory has resulted in cash from operating activities lagging historic levels, although this is anticipated to improve through H2, given the improved gross profit margins across the group and the planned release of inventory. Cash generation is the key theme for the group through F23 H2 as we look to reduce our debt levels as quickly as possible to historic levels. As stated earlier, capital allocation has been in the main limited to debt servicing in response to the Labour Court judgment and additional debt. This will remain the focus in the short term as we look to reduce our net debt-to-EBITDA levels to below the group's target of 1.5x. In terms of the CapEx, we have invested in some new equipment in the Trellidor business unit to gear ourselves up for the release of the new traditional product range. We will also be deploying ZAR 10.5 million for the purchase of a showroom office and training facility in Cape Town during H2, which will be funded through our property finance facility. In terms of acquisitions, the acquisition of the Hillcrest franchise was completed at the start of F23 Q1, and there are no line of sights of any further acquisitions for H2. As disclosed in the long-form and short-form announcement this morning in terms of dividends as a result of the company reinstating 30 employees and making certain limited backpay payments to 41 employees during the period and having to increase the group's gearing levels in order to fund these payments, the Board has taken a decision not to declare an interim dividend in respect to the 6 months ended 31 December 2022. Once gearing has stabilized, consideration will be given by the Board as to the utilization of excess cash to either be applied to share buybacks and the payment of dividends after investment and growth opportunities have been considered. As per usual, we've included some additional information for you at the end of our presentation. The earnings per share calculation has been included, the utilization of an assessed tax loss in Taylor and the consolidation of 100% of Taylor's profit following the purchase of the minority share in F22 results in improved basic and headline earnings per share for the 6 months 2022. Just a reminder that the earnings per share of ZAR 0.0004 for F22 includes the Labour Court judgment provision of circa ZAR 32 million. Following the reinstatement settlement of the judgment, no additional costs are anticipated going forward. The statement of financial position as at 31 December 2022 has also been included for review. As previously discussed, the investment in inventory has been significant during the 6 months and has contributed to the increased overdraft levels for the group. This is anticipated to release through H2 after the seasonal financial challenges of the post-Christmas period had normalized. And finally, the group's historic cash flow summary. As previously discussed, cash generation has been challenging given the increased investments in inventory while maintaining our creditors levels, which we anticipate to release into cash during H2. Back to you, Vera.

Thanks, Terry. Thanks, Damian. [Operator Instructions] Terry and Damian, please jump in and feel free to answer, both of you even if it's only directed at one. So the first couple of questions is from [Indiscernible] Investments. The first question is directed at Damian. It relates to the compounded annual growth rate. It has 3 subsections. So asking what the CAGR is in relation to revenue per head on the last 12-month basis and how it compares to, say, the listing date. Secondly, the revenue per physical distribution points that will be franchise or branch, now compared to then. And then in general, basically, just asking, has the business improved productivity in the last 7 years?

Thanks, Vera, and thanks, [ Christa ]. As discussed just on -- in the presentation, we don't -- we focus really on margin as the indicator of our productivity. And as we highlighted, it hasn't been at the levels we would like pre-COVID due to the performance of Taylor, which we're starting to see some improvement and post COVID because of the increase in raw material pricing and how we've responded through that with price increases. In terms of physical distribution points and revenue per head, it's challenging to measure those things because of the informal nature of the distribution network in Taylor as well as the Trellidor business with franchises across the globe without any line of sight in terms of their heads per count. So we've never really looked at it from that perspective. We focus more on our margins as that is our key driver in the business in terms of productivity.

Thanks, Damian. Okay. The next question, which as just pointed out, might be slightly irrelevant now that you've done the presentation regarding dividends. But the question relates to the fact that historically Trellidor has paid very healthy dividends and unfortunately, in the past couple of years not. And the question is, what are the specific requirements for dividends to resume? And when in your mind do you anticipate these requirements to be met. Once resumed, can shareholders again expect an average or estimated 50% of distributable profits to be set aside for the purpose of dividends?

Thanks, Vera. As disclosed in the presentation, we set that target of 1.5x debt-to-EBITDA, which we are focusing in getting below that. That will be the first trigger. And then in terms of the quantum, I mean that will be up for the board to decide at the time and available cash and what are the investments we might need to be looking at. So it's difficult to say at this time how much, but at least we have a target in terms of when, which we've communicated to the market.

Thanks, Damian. Okay. I think then, again, these questions were submitted prior to the presentation, but we spoke last year of your renewed efforts to restore the Rest of Africa and the U.K. channels of growth. What are the rates of growth over the last year for these channels? How are the efforts progressing and are there specific business or consumer trends of interest emerging?

Yes. Thanks, Vera. And I think we talked to the Rest of Africa, and we've seen it pretty much across the board improvement, East Africa and the islands rebounding nicely from the lack of tourism through the COVID restriction period and decent growth in Ghana at a top line level despite the challenges with steeply devaluating Ghanian Cedi against the dollar. But it has been very pleasing. The U.K., as we've talked through the presentation, has added a tough 6 months. Our market concentration currently remains very focused on one major retail chain and project work was curtailed through the first half of the year in response to 2 things. One, we believe economy and inflation in the U.K. and the second being legislation to do with starch and sugars, which has absorbed a lot of the shocks at this time that would normally be doing a program of cigarette kiosks, which is a very good revenue stream for us. So the U.K. has had a weak 6 months. The Rest of Africa has had an exceptionally good 6 months. Yes, I think that answers it.

Yes. Thank you, Terry. It's good to see the Rest of Africa is doing well. I think then lastly, there was a general question from [ Christa ], reflecting on the fact that you've been listed for 8 years and looking back at the rationale for listing on the pre-listing statement, which included creating wealth for franchisees and employees, allowing the tapping of capital markets and raising the profile of the business. And the question really is whether you believe any of these have been achieved in the last 8 years?

Yes, I think it's difficult to disagree with you, [ Christa ]. And I think we've given our compound average growth rates over a series of years. And we can see the business hasn't grown and hasn't performed to the levels that we would have liked in the circumstances. And as a result of that, I think your statement is accurate.

Thanks, Terry. Then moving on, we've got a question from [Indiscernible] can you unpack some of the different market dynamics and economics of your move into commercial product set in South Africa?

Yes. Let me just apply my mind. I'm just reading the question. Yes. It is quite different to our normal focus, which is why we've entered into it and within the group in the past, it has been an area of focus, specifically niche commercial and industrial markets, not the commoditized area in the markets. And we're looking at specific openings, large openings in particular. We're viewing where class is important. So when one could view from inside to outside or higher speed, higher repetition openings and closings of doors, as you would generally see in the distribution warehouse type environment. So that's our focus as a niche initially, and we've populated a small sales team and small installations teams in the main centers at this stage to pursue those niche opportunities. To the extent that, that is successful, we will look to expanding that. And that could well form an area of specific focus that will require some capital in the future. At the moment, the capital is very limited. We're not spending a lot of capital, but we're using our expertise in manufacturing capacity at our plants that exist currently.

Perfect. Thanks, Terry. Okay, next question from Ryan Seaborne. He asks whether you've seen any incremental demand and changing the mix of products post the riots in KZN during 2021?

Thanks, Vera. Thanks, Ryan. There has been -- I think, first of all, the rebuild post riots has been fairly slow as insurance payouts took their time and guys assessed their desire to stay in. What we have started to see more recently is that those rebuilds are happening. And there is a shift from sort of a low entry product for security reasons, security purposes into more high end, but that ranges across our product set. So our mix hasn't changed dramatically to another product set. The combination of our traditional products plus roller shutters has been the sort of driver in that space. And we are starting to see a lot more -- a little bit more demand, especially on new builds in the KZN area for our product set. So it is an exciting time. We are engaging with the professionals and architects in that space. And hopefully, we can start to benefit from some of that development.

Yes. I guess it's not just the riots, now it's also the flooding or any interesting problem with that approaching it. I think there is other question from Bruce Anderson. It basically relates to load shedding, a very topical question, I think that because I'm sitting here in the dark, he says that you mentioned that you had little comment on additional costs relating to your operations arriving from load shedding. So if you can please expand on the impact on operations and which steps you've been taking to mitigate the impact and at what costs? I know you mentioned earlier that we are lucky to be in an area where you don't get excessive load shedding but maybe you dive into -- you can expand on that?

Yes. Thanks, Bruce. I'd like to answer and say, well, management has managed the whole issue of load shedding incredibly well, but that wouldn't be true. We've been lucky with regard to the KZN area, more specifically the eThekwini area in the current period, but thanks to the floods. I mean, it's a bit of an ironic situation. But because of that, the infrastructure in eThekwini is under strain. And as a result of that, load shedding has been limited to levels above Level 4 only. In particular, in the Phoenix Industrial Park where the factory is situated, we are currently not experiencing load shedding. So disruption to the Trellidor business has been 0 in the manufacturing environment in the 6-month period. With regard to the Taylor business in Gauteng, there is load shedding factor. We do have generators that enable us to continue operating through load shedding, but there obviously is an increased cost in diesel and running the generators. But the plant itself is not heavily -- or mechanized with heavy machinery. It's light machinery. So in terms of a load on the generator, we're not talking significant costs. We're talking in the low hundreds of thousands at this stage. Probably the bigger impact to our business, which is a bit more difficult to measure is the disruption factor that's faced in all the various sales outlets around the country, not only in the offices blacking out and then increased costs in standby power systems, but also through the installation process, where power is required on site. So that's required additional investment, particularly from the franchise and distributor base in small standby generator sets and a much bigger move towards battery-driven small machinery in the installation process.

Thanks, Terry. And moving on, we've got a question from [Indiscernible]. Debt remains a key concern for us. Even if you achieve your 1.5 net debt-to-EBITDA ratio, would it not make more sense to continue to pay down debt and to make an absolute priority. Furthermore, can you please expand on your CapEx program and how ZAR 10.5 million on a showroom and training facility in Cape Town mix [Indiscernible] sales, how was finance and how do you measure your return on this?

Thanks, [Indiscernible]. In terms of the debt paydown, I think debt paydown is always a priority for us. And the consideration once we have that target will be to -- with the Board to continue to consider that. At this time, we do recognize our historic dividend policy. So just on the radar for consideration, but it will take that with the Board discussions when we get to that point. Right now, we are just focused on settling that debt. In terms of the showroom, it's more of an operational expense rather than an investment. If it's not a purchase premises, then you're going to lease it on a long-term rental. And with IFRS 16 at the moment, it makes it look exactly the same. The priority for us is that we're linked to our selling capacity and the drive to take back market share. We want to make sure that our showrooms are in the best location possible. We want to make sure that they are flagship showrooms and there's something that we can proudly put behind the Trellidor name. And in the case of Cape Town, the area we targeted was an area called Northgate Business Park, which is the hub of sort of home improvement in the area. We looked hard for a rental. We couldn't find a rental. A property became available to purchase. And that will be the sort of base for the -- for our flagship in Cape Town. And if we purchase any further franchise in the area, they will consolidate into that space. So it's all part of operational decisions and being in the right location to grow the brand, which we think we've achieved by being in that location.

Thanks, Damian. We've got another question from [ Chris Logan ]. With the addition of 41 employees being rehired during the quarter, presumably, your employee costs have risen materially. Can you advise in this regard if there's scope to improve employee productivity?

Yes. Thanks, [ Chris ]. Just as a reminder, 11 of the 41 took a package and didn't -- and are not reemployed and effectively have left the organization in full and final settlement. So that left us with 30 individuals that were reinstated in the back end of November. Through November, December, this is not an issue for us because it's a high demand period. So largely, the costs were offset by a reduction in overtime, which is normally excessive through that period. In addition to that, at the end of the period, we had a number of contract workers whose contracts were not renewed coming into January. So that reduces the excess headcount by a further 1/3 or so. And then the remaining increase in headcount will be absorbed with the launch of the new product sets going forward. And to the extent that there's inefficiency, which is possible in the workforce, natural attrition is projected to take care of that in the short term, which is something that we've practiced many times in the past. We're not anticipating the need for retrenchments at this stage.

Thank you, Terry. I think we're all just very glad to see the end of that court case [Indiscernible] all of us. Any further questions? I don't see that there are no open questions. Obviously, the recording of this presentation as well as the presentation will be available. So if anybody wants to access it later [Indiscernible] site to upload that. Otherwise, of course, Damian and Terry are always available for any further questions if you want to e-mail them or even final the e-mails through PSG Capital, we're also welcome to do that. Thank you, Terry. Thank you, Damian. Thank you, everyone, who joined us today. I hope you all have light and electricity, and a lovely day.